Modern award default funds headed for inquiry
The future of modern award default superannuation funds appears headed to a Senate inquiry, with two key members of the Federal Opposition having expressed serious concern about members’ money being lost because it is being channelled towards underperforming funds.
The move towards a Senate inquiry has gained momentum on the back of concerns that the automotive industry-based MTAA Super suffered significant losses in the lead-up to the global financial crisis, but was nonetheless nominated as a default fund across a number of modern awards.
Both the Opposition spokesman on Financial Services, Senator Mathias Cormann (pictured), and the Opposition whip in the Senate, Senator David Bushby, have expressed strong public concern at the manner in which particular industry funds have been allowed to dominate the default fund regime.
Cormann has warned that the current process favours union-based industry superannuation with the result that they now represent the top 10 most commonly listed default funds under modern awards.
“These ten funds are listed 330 times as default funds under modern awards having been chosen through a secretive process riddled with undeclared conflicts of interest,” he said.
“An anti-competitive process means Australian superannuants in default funds are not getting the best possible value from their super savings,” Cormann said.
The Opposition senator pointed to the fact the Labor Government had promised during the last election to initiate a Productivity Commission inquiry into the selection of modern award default funds and that a Senate-imposed deadline for a new default fund regime had expired at the end of May.
Cormann said the Government’s failure to respond to the Senate or to refer the matter to the Productivity Commission represented “an abject failure of consumer protection”.
AUTHOR
Mike Taylor
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